CLSA in CNBC: Big pharma fights California, Ohio voter initiatives

Voter initiatives in California and Ohio to control the price of prescription medications could be on the November 2016 ballot, and the efforts to curb rising drug costs have the industry pushing back.

The California and Ohio initiatives tie the cost that state programs pay for drugs to that paid by the U.S. Department of Veterans Affairs. Proponents of the California proposal are collecting signatures to get it onto the ballot and put it to a vote next year.

“In the aggregate, we know that the V.A. price is, generally speaking, 20 percent below the average government price,” said Michael Weinstein, president of the Los Angeles-based AIDS Healthcare Foundation and the sponsor of the so-called California Drug Price Relief Initiative. “We want California and Ohio to get that price.”

The industry is pushing back against the drives in California and Ohio with claims that capping prices would reduce innovation among pharma companies.

Passage of the drug-price initiative “would have disastrous effects on the accessibility and affordability and quality of health care in California,” said Sara Radcliffe, president and CEO of the California Life Sciences Association, which represents more than 750 biotechnology, pharmaceutical, medical device and other related companies and organizations. “By pegging the price of drugs to that price that is paid by the Veterans Affairs, it will limit the resources that are available for innovation by our member companies. And that will ultimately come back to harm the patients.”

Radcliffe said the drug and biotech companies have a difficult road ahead of them when they try to bring innovative drugs to the market. She said it typically involves 12 to 15 years of research effort, and in the end “only one out of five medicines are making back their costs.”